Don’t be in a rush to book profits in RIL; stock likely to head towards Rs 1800 in 1 year

The Q1 results pushed RIL to fresh 9-year high. The company has performed on all growth and profitability parameters across petrochemical, telecom, and retail divisions.

But, the trend might be slowly switching towards telecom and retail which will lead the next leg of growth for Reliance Industries as indicated by Mukesh Ambani, Chairman, RIL in 40th AGM.

The key highlight of RIL’s 40th AGM was the aggressive expansion of Jio through a) launch of Volte phone free of cost, and b) market leading rates for data/television services on JIO and, c) the fast-growing technological additions to JIO.

“The company is changing gear on telecom and retail business with growth across top line and bottom line and we believe that the next set of positive surprises on profit numbers will be visible from these two divisions over next 12 months,” Nikhil Khandelwal, MD, Systematix Shares told Moneycontrol.

"Investors should continue to maintain longs or enter into new long positions in Reliance. We have a target of Rs 1,800 on the stock from 12 months perspective," he said.

Meanwhile, Abhijeet Bora, Research Analyst, Oil & Gas, Sharekhan advises investors to stay invested in Reliance Industries for the long term to benefit from earnings growth from commissioning of downstream projects and likely value creation from telecom venture.

“We have a price target of Rs 1,665 on Reliance Industries," he said.

Bonus issue good for investor sentiment

Reliance Industries in its 40th Annual General Meeting (AGM) in Mumbai, announced a bonus issue of 1:1. This means that shareholders will get 1 bonus share for every one share held by an investor.

Well, this is the largest bonus issue in the country. Historically speaking, the company had previously announced a bonus issue prior to this in the years of 2009, 1997 and 1983.

"The predatory strategy to capture telecom space is quite aggressive and highly disruptive. The bargaining power that the company will enjoy once the competition is marginalized would be immense which is good for the investors in their long-term wealth creation journey," Jimeet Modi, CEO, SAMCO Securities told Moneycontrol.

"It is a great opportunity for Reliance investors to enjoy the telecom wave plus the added 1:1 bonus advantage in the short term. One man’s gain is other’s loss is the reality in the telecom space," he said.

Technical Outlook

The counter has rallied more than 5 percent in the last two weeks and the patterns on the weekly charts are looking indecisive. Added to this, last few days of price behaviour suggests that RIL could see some consolidation or mild correction.

“As this energy giant has completely underperformed for a considerable period of time and a late entrant in this bull market with a massive breakout above its 8-year-old triangular formation, long term trends are very attractively placed,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.

“Hence, any decent correction should be considered only as a buying opportunity. If this counter is available in the zone of Rs 1,460–Rs 1,427 one should pick it up for a one year target of Rs1,649,” he said.

(Disclosure : Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.)